Indonesia considers tax exemption for provincial minimum-wage earners
The Finance Ministry is reviewing a possible adjustment to the personal income tax allowance for 2027 and assessing its effect on purchasing power.
Indonesia is considering linking its personal income tax allowance to provincial minimum wages, Coordinating Minister for Economic Affairs Airlangga Hartarto said in Jakarta. Under the proposed approach, workers earning the provincial minimum wage would be exempt from income tax.
The current tax-free allowance, known as PTKP, is Rp54 million a year, equivalent to Rp4.5 million a month. Airlangga said this leaves part of the earnings of some workers paid at the provincial minimum wage subject to tax.
He illustrated the position with a monthly salary of Rp5 million, or Rp60 million annually. After applying the existing allowance, Rp6 million of that annual income remains taxable.
Deputy Finance Minister Juda Agung previously said the ministry was examining an adjustment to PTKP for 2027. It is assessing how the proposed incentive would affect purchasing power. The allowance adjustment was discussed alongside economic stimulus measures and other government programmes at Merdeka Palace in Jakarta on 30 September 2026.
